Here are some of the measures being put in place to help individuals who are in financial difficulties as a result of loss of income due the effects of the COVID-19 pandemic.
A break in mortgage payments for 3 months was initially announced in March, however given the ongoing uncertainty it has been confirmed that these measures will be extended by another 3 months. Borrowers need to contact their lender directly to see what arrangements can be made, however it has been strongly advised that if you are able to re-start mortgage payments it is in your interest to do so. Lenders have been told by the Government not to repossess property at this time.
Anyone with an overdue or expected tax liability which they think they will be unable to meet should call 0800 024 1222 to see whether arrangements can be made to defer or spread the payment. This may be appropriate for any contractors who are involved in an existing settlement arrangement to pay tax due under the Contractor Loan Charge scheme.
The Government has committed to raise the Local Housing Allowance up to 30% of the market rent in your area. This should help anyone who is already claiming universal credit or separate housing benefit.
The Financial Conduct Authority (FCA) has issued guidance to lenders regarding potential credit card payment holidays of up to 3 months for individuals whose income has been affected by COVID-19. Lenders have assured individuals that payment breaks won’t affect their credit record, providing they have been agreed and approved by their lender. Borrowers should contact their lender directly to see what arrangements can be made.
The FCA have introduced a 3 month loan repayment freeze on car financing such as personal contract purchase (PCP) and other high cost credit agreements to further support consumers facing financial difficulties due to COVID-19. Their advice to finance firms and consumers is that they should consider the amount of interest which may build up and balance this against the need for temporary support. They add that if a payment freeze isn’t in the consumer’s interests, firms should offer alternative solutions, potentially including the waiver of interest and charges or re-scheduling the term of the loan. As always, if you believe you may benefit, please speak to your finance provider.
Arranged overdrafts of up to £500 to be charged at 0% interest. Contact your own bank for more information.
Deferral of the Self-Assessment tax liability due on 31 July 2020 to 31 January 2021 and the availability of time to pay arrangement beyond that. Our limited company (PSC) contractors can find more information regarding this here, and our self-employed / CIS contractors can find more information here.
HMRC have confirmed that parents and guardians who are normally eligible for tax-free childcare will continue receiving the entitlements during the summer term if their income levels fall due to the impact of coronavirus. The Government has announced that any working parent usually eligible for 30 hours free childcare or tax-free childcare will remain eligible if they fall below the minimum income requirement due to COVID-19. Subject to Parliamentary approval, parents who are critical workers will also remain eligible for these entitlements if their income has increased over the maximum threshold during the COVID-19 pandemic.
Anyone who has a Lifetime Individual Savings Account (LISA) will be aware that if they make withdrawals that don’t meet the criteria (e.g. to buy a home or if the investor has a terminal illness), such withdrawals are treated as unauthorised. In that event they would normally face a tax charge of 25% on the sum withdrawn. To help investors during the coronavirus pandemic (COVID-19) any withdrawals between 6 March 2020 until 5 April 2021 will now only be subject to a charge of 20%.
Don’t forget that the limit has been raised from £30 to £45!